Avoiding Payment Delays from Billing Challenges in Government Contracting

You’ve won the contract; the work is underway (or even finished), but how do you actually get paid? Billing the federal government is an entirely separate process, often more complex than the work itself (if you let it be). Between compliance requirements, strict documentation rules, and lengthy payment terms, it’s no surprise that payment delays are one of the most common (and costly) frustrations in this space.

Here are the biggest billing challenges we see and how to stay ahead of them, so your cash flow doesn’t take a hit.

Inaccurate or Non-Compliant Invoices

Government invoices are not your typical accounting software generated invoices. They require detailed supporting documentation, precise formatting, and strict adherence to contract terms. A small mistake, like a missing labor category or wrong CLIN, can get your invoice kicked back, restarting the clock on the entire payment process.

Common Issues Include:

• Wrong or outdated contract number or CLIN
• Missing labor category or incorrect labor rate
• Incomplete backup (timesheets, receipts, etc.)
• Incorrect application of indirect rates
• Not following the invoicing instructions laid out in the contract. This can be as simple as a formatting mistake.

How to Avoid It:

• Create invoice templates for each contract type (T&M, CPFF, FFP, etc.) as needed. Each template may need to be modified to adhere to each specific contract, but it is a great starting place. If your accounting system cannot meet all of the invoicing requirements or fields, create the invoice in Excel or Word and record it in the accounting system once complete.
• Double-check contract references, labor categories, billing rates, CLINs, etc.
• Attach all required documentation, such as timesheets, travel receipts, and status reports.
• Review indirect rate calculations regularly to ensure they match provisional or negotiated rates.
• Have a second set of eyes, preferably someone familiar with FAR/DFARS, review invoices before submission.

You’ll want to get this right the first time. It is possible to have your invoice rejected multiple times before being accepted. This is a huge burden on cash flow.

Poor Timekeeping, Cost Tracking, and Misunderstood Billing Terms

Time and cost are the foundation of nearly every government invoice. If your timekeeping is sloppy or your team misunderstands how billing terms work under the contract, you’re setting yourself up for rejection and delay.

Where It Goes Wrong:

• Employees don’t submit timesheets daily (or accurately).
• Timecard approvals are not being done on time.
• Labor hours aren’t tied to the right CLIN or cost objective.
• You’re billing based on actual indirect rates when provisional rates are required.
• Expenses (travel, materials, subs) are billed without proper documentation.

How to Fix It:

• Implement a DCAA-compliant timekeeping system and require daily submissions. Use software that logs changes and supports audit trails.
• Ensure approvers are properly trained on using the timekeeping system. Make sure they understand the importance of timely timecard approvals. We suggest setting up automatic notifications.
• Train your team on which project/task/CLIN they should charge. Ensure team members only have access to the tasks that they work on.
• Understand your billing instructions inside and out.
• Work with an accountant who understands billing the government.

Without disciplined timekeeping and cost tracking, even the best invoice template won’t save you.

Lack of Internal Billing Controls and Submission Tracking

Even when everything else is done right, contractors can still suffer from payment delays due to poor internal processes. Submitting the invoice is just the beginning. You need systems to ensure it was received, approved, and paid. Without clear internal controls, it’s easy to miss billing windows, submit the wrong amounts, or leave money on the table.

What We See Often:

• No internal billing checklist or review workflow.
• Invoices are submitted without a second set of eyes.
• Nobody is tracking payment status after an invoice is submitted.
• No follow-up process with contracting officers or finance POCs.

How to Improve It:

• Establish a billing workflow with clear roles: who drafts, who reviews, who submits, and who follows up.
• Use a standardized checklist to verify contract compliance, math accuracy, and supporting documents before submission.
• Regularly keep track of payment status on invoices.
• Follow up with the appropriate POC if a payment issue arises.

You can’t afford to let invoices disappear into a black hole. Especially when margins are tight, and payment timelines are already long.

Your Path to Smoother Billing

Billing the federal government requires accuracy, consistency, and strong internal processes. Even small mistakes can delay payment and put pressure on cash flow. By maintaining compliant timekeeping, precise invoicing, and clear submission workflows, contractors can reduce risk and keep projects financially on track. Redstone GCI supports contractors with accounting system setup, invoice preparation, timekeeping solutions, and ongoing accounting compliance consulting, helping ensure that billing processes meet government requirements and payments are received without unnecessary delay.